When planning your current tax strategy, if you know the available deductions (standard deduction 2018) and credit limits, you will be happy to know that you can significantly reduce (or even eliminate) your income tax obligations. . For example, a retirement plan can have a net positive tax effect. Similarly, having your own home will have a positive impact on you. Although the university is more expensive than ever, you can send your child to the university while enjoying significant tax benefits.
Here are some things to consider:
For the purpose of discussion, suppose you are married, you have three children (two children in college) and you work full time. Your annual income is $76,000. Assuming you have developed these plans at the beginning of the exercise, you have a total of 12 months to implement it.
The main tax cuts you can get are to invest your money in the 401k program.
If you and your spouse pay $5,000 to your 401k account, your annual taxable income will be reduced by $10,000. This means your adjusted total revenue is $66,000. This will save a lot of budget. Another important tax cut is when you buy a home and record all standard deduction 2018 in detail.
Suppose you paid $16,000 in mortgage interest. In addition, he also paid a property tax of five thousand dollars. He also donated $3,500 to his church, synagogue, mosque or other eligible organization. For discussion purposes, suppose you live in a state that taxes you and pays $3,000.
Your detailed deduction is equal to $27,500. Your adjusted total revenue has now changed from $66,000 to $38,500.
If you apply for 5 personal exemptions, your taxable income will be reduced by $15,000 to $23,500. Your income tax bill will be around $3,000.
Now let’s see if we can reduce more. How to use the relevant tax credit? Since your two children go to college, assume that one of the children spent $15,000 on tuition. In this case, there is a tax credit called tributary credit for education and lifelong learning, worth up to two thousand dollars. In addition, your other child may be eligible for a $1,500 hope credit line. For the latest advice on these two tax credits, please consult your tax professional. But if you qualify, your final tax liability will be reduced by $3,500. Since you owe three thousand dollars, your tax is now zero.
Finally, as we plan to develop this strategy at the beginning of the year, you must continue and adjust your holdings.
You can also adjust the withholding tax because you have effectively planned your tax liability in advance. But don’t stop there: open the Ross Irish Republican Army (both) and deposit the remaining cash into it, then spend money. If you have anything else, please book a money for the third child who has not been enrolled for a few years.
At the beginning of their marriage, many couples do not discuss their financial situation together, which is crucial for taxation and financial planning. Due to the personal or sensitive personal finances, many newly married couples have difficulty using the phrase “our tax” and “my tax”. However, it is important that each spouse knows the financial situation of the entire family, and of course the financial goals. These financial information is important to determine the most appropriate tax method and to control the tax payable for the year.
Tax planning and organization
There must be sufficient budget planning for each quarter at least every year. Specifically, consider the income and expected costs of the year. Then consider the fees included in the deduction and tax credit. You also need to estimate the planned revenue and expenses for next year, as this will help you determine if you need to make payments at the end of the year or in January. If you have such a bad file, you can’t estimate your income and expenses, you will want to stop here. First collect all payroll, broker statements, total receipts, bank statements, credit card statements, and then enter this information in a spreadsheet organized by revenue and expense. If you are uncomfortable with spreadsheets, you can use several excellent personal finance free web application services, such as Mint.com.
Tax credit and deduction
There are new tax breaks or available credits every day. This year’s high-cost projects are home energy tax credits, student US credit opportunities, and so on. In terms of standard deduction 2018, mortgage interest and state income taxes are often the most important factors, and to a lesser extent, medical expenses exceed 7.5% of adjusted total income (AGI), as well as all donations and charitable expenses each.